Labour’s dramatic seizure of control over Jingye-owned British Steel was a clear demonstration of inept handling of industrial issues.
Emergency parliamentary sittings are best confined to states of war, not a self-created crisis partly caused by a bonkers drive to net zero.
Ownership of steel is seen as being in the national interest. If that is the case for blast furnaces, what about Heathrow, Thames Water, Royal Mail and much else?
Across the Atlantic, a paranoid President has ordered a probe into pharma imports under the terms of the Trade Expansion Act of 1962. It allows trade barriers on goods regarded as critical to national security.
The public interest is sufficient grounds alone for querying Chinese or any overseas ownership of vital British public assets.
But there are broader reasons why signing away chunks of UK infrastructure to foreigners is wrong. Decisions on steel, affecting production and jobs in Britain, were being taken far away with no thought of the consequences for the UK.
Interest payments: Czech billionaire Daniel Kretinsky’s £3.6bn deal for the Royal Mail is being financed by £3bn of high-cost debt. That is in addition to the £2bn already on his books
After the transfer of assets from public markets, a shroud of secrecy descends. Successive overseas owners of Thames Water drained it dry of resources, leaving behind waterways overflowing with effluent.
A sub-station fire brought overseas-owned Heathrow to a halt. And Business Secretary Jonathan Reynolds calmly signed away control of International Distribution Services, owner of the Royal Mail, to Czech sphinx Daniel Kretinsky.
A common theme for all these deals is inappropriate financial engineering. All the companies involved were bought, or are being purchased, with heavy leverage.
The Trump trade putsch has cast a dark pall over debt markets. US long bond rates have climbed sharply and the appetite for lending for deals in the $1.4 trillion high yield buy-out market has been hit hard.
It is hard to think that Kretinsky’s offer for Royal Mail will be unaffected. The Mail on Sunday has reported profits at his energy group EPH are under siege, down from £4.5billion in 2023 to £1.4billion this year.
The £3.6billion deal for Royal Mail is being financed by £3billion of high-cost debt. That is in addition to the £2billion already on its books.
The notion that it will be possible for Kretinsky to fund this burden and fulfil undertakings made on jobs and investment in changed trade and debt markets is ludicrous.
Shrewder minds than those making business decisions in Whitehall should recognise this before it is too late.
How long before Kretinsky comes cap in hand to the Starmer government asking for a bail-out?
The last Labour government was deeply averse to public ownership. The current administration, with its shattered business ties and poor judgement, is at risk of being sucked into a new cycle of nationalisation.
Cashing out
My first job out of business school was working on a management information project for the then chief executive of
De La Rue. At the time, it was a sprawling conglomerate. The group had added brick production, gas boilers and security transport to its core businesses of printing the world’s banknotes and postage stamps.
As it simplified down the decades, concentrating on currency printing, it became less viable and was constantly selling assets under pressure from dissident investors.
De La Rue recently sold its authentication operations to Crane NXT for £300million to reduce debt. Now, the inevitable has happened.
Under siege from veteran City financier Edi Truell, who offered £245million in cash, it has thrown in its lot with American buyout group Atlas. It promises cash to speed De La Rue’s change from paper to polymer currency.
The premium of 19 per cent to a pre-bid December 2024 share price represents an escape route for activist Crystal Amber, a long-standing advocate of change.
The departure of one of the UK’s oldest public companies from the London Stock Exchange is dispiriting.
It also raises questions as to whether a soft-centred board could have put up muscular resistance.
Unsafe advice
Neil Woodford shows astonishing chutzpah.
The failed fund manager, who destroyed the savings of 300,000 people six years ago, plans to roll out a stock-picking service for investors seeking independent and long-term advice.
The Financial Conduct Authority should snuff out this initiative before more consumers are harmed.
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